Given Imaging – Why Is GIVN Stock Soaring?

Most investors probably weren’t familiar with Given Imaging (GIVN[1]) before today. But it’s probably on their radars now given that GIVN stock is up over 26% in this morning’s trading.

Source: Flickr[2]

That jump extends what was already a strong year for GIVN stock. Shares have more than doubled since the start of July, while Given Imaging stock is up around 70% since Jan. 1.

Why Given Imaging Is Climbing

But first things first — what does Given Imaging do? Well, Given Imaging is a healthcare play, more or less, as the company develops, manufactures and markets diagnostic products for the visualization and detection of disorders of the gastrointestinal tract.

In fact, it PR flacks brag that Given Imaging provides “one of the broadest technology platforms for visualizing, diagnosing and monitoring the digestive system, including its flagship PillCam, an innovative swallowed capsule endoscope.”

That might not sound super exciting … but what is unarguably exciting is the fact that Given Imaging just got snatched up by a larger healthcare firm. Yes, shares of GIVN stock are up today because Irish medical devices company Covidien (which boasts a market cap of over $30 billion) is buying Given Imaging (which has a market cap of just under $1 billion).

Per the press release:

“Covidien will acquire all of the outstanding shares of Given Imaging for $30.00 per share in cash, for a total of approximately $860 million, net of cash and investments acquired. This transaction provides Covidien additional scale and scope to serve the multibillion dollar global gastrointestinal (GI) market and supports the Company’s strategy to comprehensively address key global specialties and procedures.”

Bryan Hanson, the Group President of Medical Devices & U.S. for Covidien, had other optimistic words about the deal.

“We believe GI is one of the most attractive specialty procedure areas. Acquiring Given will enable Covidien to significantly expand its presence in a $3 billion GI market.”

Still, shares of COV stock didn’t budge on the news, while GIVN stock soared. That’s likely because, as of Friday’s close, GIVN stock was trading for under $24, making Covidien’s acquisition price more than a 25% premium.

After today’s jump, shares of GIVN stock are up to just under that $30-mark.

Other big news in the world of mergers and acquisitions also came from Sysco (SYY[3]). The food distribution giant announced that it is acquiring US Foods for a total of $3.5 billion … and SYY stock jumped over 12% on the news.

Other big winners in early Monday trading included Highway Holdings (HIHO[4]), which gained nearly 40%, and Prana Biotechnology (PRAN[5]), which improved by nearly 20%.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.